Obama Prospects Brighten as Economic Recovery Moves to Expansion

Nov. 14 (Bloomberg) -- Less than 12 months from the
presidential election, the U.S. economy has moved from recovery
to expansion, prompting similar shifts in President Barack
Obama’s political prospects.

The unemployment rate moved downward last month, to 9
percent. The number of Americans filing applications for
unemployment benefits fell to the lowest level in seven months
two weeks ago, a sign the recovery may be encouraging companies
to limit cuts in headcount. And a private outplacement company
is predicting that jobs losses in the government sector, a drag
on U.S. employment, may be leveling off.

Gains in household spending, the biggest part of the
economy, last quarter led economists to raise their growth
forecasts for the remainder of this year and for 2012, the
median estimate in a Bloomberg News survey showed last week. The
services industry and manufacturing both continue to expand,
according to figures this month from the Institute for Supply
Management.

Vowing to be a “warrior for the middle class” Obama has
struck a populist message on job creation this fall that seems
to be breaking through with voters. His job-approval rating has
climbed by five points in one survey and he’s seen his daily
Gallup Poll tracking numbers approach 50 percent.

‘We Can’t Wait’

“Obama has finally hit the right balance with ‘We Can’t
Wait,’ in signaling to voters that he understands, and is
working to alleviate, their struggles,” said Bob Shrum, a
Democratic strategist. “The basic matrix should be that we’re
making progress but we have a lot more to do,” he said.

The change in Obama’s standing comes as the Republicans are
still vetting presidential candidates. Less than two months
before the first primary contest in the Iowa caucuses, none of
the Republican contenders is consistently receiving more than 30
percent of their party’s support nationally.

“Anyone who thinks that beating President Obama will be
easy is delusional,” said Steve Duprey, a senior adviser to
Senator John McCain’s 2008 presidential campaign and a former
Republican Party chairman in New Hampshire. “President Obama
has proven that he is the best fundraiser in the history of
American elections, his team is smart and technologically savvy,
and he has a unified party.”

White House View

White House officials are girding for an election they
anticipate will be contested over an economy that was
contracting at a 6.7% percent annual rate when Obama was
inaugurated in January 2009 and that they predict will grow at
2.9 percent in 2012.

No president since 1936 -- when Franklin D. Roosevelt won
his second term -- has been re-elected with unemployment above
7.2 percent. Though that was the rate when Ronald Reagan won re-election in November 1984, the economy also was growing at 7
percent at the time.

Before a Republican nominee emerges, Obama is sharpening
his message that Republicans are doing nothing to expand jobs.

“The president has been fighting every day to create jobs
now, restore economic security for the middle class, and build a
fairer economy that rewards hard work and responsibility,” said
Ben LaBolt, Obama’s campaign spokesman. The Republican
presidential candidates are “proposing a return to the same
policies that led to our economic challenges.”

Poll Data

Obama’s standing in polls, while improving, has not moved
into positive territory.

In the daily Gallup tracking survey, Obama ended last week
with a 47 percent approval rating, up from 42 percent at the
beginning of October. In a Quinnipiac University poll of voters
conducted Oct. 25-31, his job-approval rating climbed six
points, to 47 percent from 41 percent in survey released Oct. 6.

At the close of the Asia-Pacific Economic Cooperation
summit in Honolulu, Hawaii, Obama said yesterday that world
leaders “continued our efforts to get the global economy to
grow faster.”

“If Europe has a major recession,” he said “that will
have a direct impact on U.S. growth and our ability to create
jobs and people raising their living standards.”

The economy added 80,000 jobs in October as the
unemployment rate dropped to the 9 percent figure from 9.1
percent in September. Private hiring in October, which excludes
government agencies, rose by 104,000 after a revised gain of
191,000 in September.

Government Lay-Offs

The outplacement firm Challenger Gray & Christmas Inc.
reported that government sector lay-offs slowed to a near halt
last month, signaling that one of the drags on hiring may be
ending. Government entities announced 2,785 job cuts in October,
down from 54,182 in September, a 95% drop, bringing the sector’s
job-cut total to its lowest level since January 2009.

“It looked like the economy was flashing red” in July,
August and September, said John Challenger, the firm’s chief
executive officer. “Now it’s back to flashing yellow, or at
least that weak green mode since the recession ended.”

The White House’s internal forecasts expect that the
jobless rate will average 9.1 percent in 2011 and show little
change at 9 percent in the election year, according to the
Office and Management and Budget Sept. 1 review.

The unemployment rate during the fourth quarter next year
will average 8.7 percent, according to the median forecast among
75 economists surveyed by Bloomberg between Oct. 5 and Oct. 11.
They expect growth to average 2 percent for the year.

“It may be that, quote, ‘Prevented a second Great
Depression’ does not read well on a bumper sticker,” Gene
Sperling, director of the White House’s National Economic
Council, said Oct. 31 at the Economic Club of Washington when
discussing Obama’s record. “But it is an appropriate
description of policy choices that dramatically improved and
helped the lives of tens of millions of our fellow working
families and the global economy.”